Richard Bourne was reappointed as chairman of the Trust in September, after chairing it for four years.

But Monitor has used its regulatory powers to force him to step down over concerns about patient safety, leadership and waiting times.

A statement from Monitor said: ''Regulatory action has been prompted by the trust's failure to comply with healthcare standards, its failure to exercise its functions effectively, efficiently and economically, and serious and wide-ranging concerns as to overall governance and leadership at the trust.''

The news comes after Monitor intervened at another foundation trust, Basildon and Thurrock University Hospitals NHS Foundation Trust, after a damning report found poor hygiene and standards of care.

The foundation trust status is a supposed marker of excellence and allows NHS organisations greater financial freedom and control over their own affairs.

Mr Bourne's removal came as the head of the healthcare watchdog said the system of rating the NHS should be scrapped in the wake of revelations about hundreds of avoidable deaths at one hospital.

Baroness Young said that the current inspection regime which rates hospitals from "excellent" to "poor" was simplistic and should be replaced by a "much more sophisticated" process.

She also said that some informaton published by her own organisation was up to 18 months out of date and acknowledged that cleanliness ratings could not always be relied upon.

The Care Quality Commission (CQC) found that poor nursing, filthy wards and lack of leadership at Basildon and Thurrock University NHS Hospitals Foundation Trust contributed to 400 avoidable deaths in a year.

Death rates at the Essex trust were a third higher than they should have been, said the Care Quality Commission.

Among the worst failings were a lack of basic nursing skills, curtains spattered with blood on wards, mould in vital equipment and patients being left in A&E for up to 10 hours.

Concerns about death rates at the foundation hospital trust were first raised a year ago, but an internal investigation failed to find anything wrong and senior managers dismissed the concerns.

The new external report found “systematic failings” in the trust’s senior management team, who are still in their jobs. The CQC said its confidence in the management’s ability had been “severely dented”.

Yet the trust was rated as "good" on quality of service in the CQC's 2008/09 assessment and marked "excellent" for its financial management. It was also given 13 out of 14 for safety and cleanliness.

Baroness Young, who chairs the CQC, told BBC Radio 4's Today programme: "That is valid informaton about a year ago but it's not valid information about now."

She blamed the system of rating used by the Healthcare Commision, which was replaced by the CQC eight months ago for the discrepancy.

"We inherited the annual health check from our predecessor, we are very clear that it is not the way we want to regulate in the future," she said.

"It covers about 200 indicators and tries to summarise the performance in a very complex hospital in one word, either 'good', 'excellent', 'fair' or 'poor', I don't think that's right.

"There will be many hospitals with good bits and poorer bits, and we need a much more sophisticated system that doesn't just look at data, that takes real information, information on the ground, into account and also the views of people who use the hospital."

The watchdog’s report follows an investigation earlier this year into Mid-Staffordshire NHS Foundation Trust, which found similar problems, with up to 1,200 avoidable deaths.

Ministers assured patients at the time that it was an isolated incident. The failures at Basildon will raise concerns that similar problems are widespread in the NHS.

Among the CQC’s other findings were the avoidable deaths of four patients with learning disabilities; a lack of children’s nurses and doctors in A&E; a failure to feed patients properly or give medication correctly; and a high rate of bedsores among elderly patients. Concerns about standards at Basildon were raised as long ago as 2001, when the Royal College of Nursing described conditions there as “Third World” because of a shortage of beds. Since then the hospital has suffered a series of health scares and accusations of negligence.

The CQC report has been passed on to Monitor, the organisation in charge of foundation hospital trusts.

A statement by Monitor said there had been a “significant breach” by Basildon and a task force of experts would be sent into the trust.

Monitor has the power to replace the trust’s management but it was understood last night that none of the board members had been threatened with dismissal.

Katherine Murphy, the director of the Patients Association said: “Yet again patients are being neglected. Lack of monitoring, lack of help with feeding, lack of dignity, avoidable pressure sores. How many times do the public need to keep hearing about this before the Government is embarrassed enough to do something about it?

“We’re sick and tired of NHS managers and senior staff walking away unscathed when families are left with a life sentence of grief.”

Basildon was one of the country’s first foundation trusts in 2004, meaning it was given more freedom over its spending and did not have to answer to ministers. Mid-Staffordshire was also a foundation trust, raising concerns that the system is failing. It also emerged that Basildon was the first foundation trust to be issued with a warning notice about poor infection control earlier this month over hygiene in its A&E department and contamination of medical equipment.

The trust, which has a budget of £250 million and more than 700 beds at its main hospital in Basildon, has repeatedly pledged to improve but failed to do so, the CQC said.

Andrew Lansley, the shadow health secretary, said: “I am extremely disturbed by this news and the effect that these shocking conditions may have had on patients. It is unforgivable if any lives have been needlessly lost.

“When the appalling standards of care at Stafford Hospital were revealed, we were assured by Labour ministers that it was ‘an isolated case’ — that sort of complacency is simply not good enough.”

Andy Burnham, the Health Secretary, has proposed a change in the law to allow trusts to be stripped of foundation status if they fail.

The CQC had been aware of problems at Basildon for more than a year and was in contact with managers to correct the situation. Repeat inspections found no improvement. From next April, the CQC can take action, including fines, and, if necessary, closures of departments or the whole hospital. Cynthia Bower, the watchdog’s chief executive, said: “We want to act swiftly at Basildon to nip problems in the bud, working closely with other regulators. The trust has taken our concerns seriously but improvements are simply not happening fast enough.

“Our confidence in the management’s ability to deliver on commitments and to turn the situation around has been severely dented.”

Mike O’Brien, the Health Minister, said: “Monitor, the foundation trust regulator, together with the Care Quality Commission has today used its formal powers of intervention at Basildon and Thurrock NHS Foundation Trust to drive rapid improvements in patient care including sending in an expert task force to oversee and support this. We expect these issues to be dealt with quickly and effectively to ensure high quality, safe care for patients.”

Michael Large, the chairman of Basildon and Thurrock University NHS Hospitals Foundation Trust, said: “That Monitor has found us to be in breach of our terms of authorisation as a foundation trust is an extremely serious matter and we do not seek to underestimate its gravity.

“I want to reassure our local community that the safety and wellbeing of our patients is our highest priority.”